Review your homeowner’s policy

It’s that time of year again: time to review your homeowners’ insurance policy.

Wait—you don’t typically do that? There are many reasons why you should give this important policy an annual review, particularly if you made changes to your home during the past year.

Here are some tips regarding what to look for when you do your review.

1. It’s a good idea to purchahomeownerse “guaranteed replacement value” insurance. This type of homeowners’ insurance assures that your home will be rebuilt in the event of a disaster, no matter what the cost. Because home values are on the rise again, it’s important to make sure you’ll receive the right amount to rebuild, rather than the amount your home was once worth. Guaranteed replacement value policies will absorb the increased costs and provide the homeowner with a cushion if construction prices increase.

2. Call your insurance agent and ask if the replacement cost value has gone up on your home or on anything in your home.

3. If you’ve done any renovations during the past year, such as adding a deck or replacing countertops, let your insurance company know about it. This protects you from being underinsured in case of damage or loss.

4. If you bought anything of value this year, contact your insurance company about changing the coverage amount on your interior belongings. This could include a laptop, television, piece of jewelry, or even a new chair!

5. Do you need any endorsements? An endorsement is an amendment to the basic homeowners’ policy and provides a way for homeowners to ensure that their high-priced possessions will be insured in the event of a disaster. For example, a woman wanting to insure her diamond engagement ring would obtain an endorsement to her homeowners’ policy in order to prove not only that she owned the ring, but also its value. She would do this by obtaining a formal appraisal of the ring from a jeweler, and then sending the appraisal to the insurance carrier for special notation on the insurance contract. Formal endorsements such as these will help in the claims process and assure that the homeowner gets the full dollar value of the item if it is lost, stolen or damaged in a disaster. Typical items that are endorsed in addition to jewelry include furs, antiques, and collectibles.

6. Review your policy to ensure you have adequate peril coverage and liability insurance.

While most plans cover certain types of natural disasters, and others cover personal liability, you may want to consider adding on specific insurance clauses for flooding, hurricanes, earthquakes, or tornados if you live in a high-risk area.

7. Some policies do not require homeowners to have personal liability insurance, but this is a good idea if you are planning on having others in your home quite often, especially if you have a swimming pool. This doesn’t just mean house guests. Consider people such as tutors, babysitters, or construction workers who may be spending time in your home.

8. See if you’re qualified for a discount this year. Maybe you updated your smoke alarms or installed a security system. If so, you could be eligible for a discount. It never hurts to ask!

9. As a last piece of advice, document everything! To speed up the claims process in the event of a disaster, it’s a good idea to have photographs or video of the entire contents of your home and the home itself. These photos and videos should be stored in a fireproof box, preferably at a relative’s house or in a safe deposit box.

Doing this will help homeowners compile an inventory of their possessions (which is what the insurance company will demand) after a disaster.

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